Fed to Bond Market: “Yes We Were Serious”…and More.

Reuters: Fed Officials Keep Door Open to More Bond Buying - …in the minutes from the meeting, released Wednesday, which said several members of the Fed’s policy-setting committee “indicated that additional monetary policy accommodation could be necessary if the economic recovery lost momentum or the downside risks to the forecast became great enough.”

Market Watch: Treasuries Turn up After FOMC Minutes- Treasury prices turned up Wednesday (Yields Down 1 basis point to 1.76%) , pushing yields back towards multi-month lows, after minutes from the Federal Reserve’s latest meeting showed some officials were not confident enough about signs of an upturn in growth to alter their guidance that interest rates were likely to stay exceptionally low until late 2014.

Bond Buyer: Activity Stalls in Sleepy Munis – The tax-exempt market has been asleep so far this week as traders say action in the primary and secondary markets has been muted. Still, the Municipal Market Data scale showed munis weakening. Yields inside three years were steady while the four- and five-year yields rose up to two basis points. Outside six years, yields jumped two to six basis points.

Reuters MuniLand: Puerto Rico’s Black Swans- Great article and mention for Learn Bonds… Puerto Rico is a small island with a population of 3.7 million people and a municipal debt load of $104 billion. Only Florida, Illinois, New Jersey, New York, Ohio, Pennsylvania and Texas – states that are all substantially larger – have more debt outstanding.

Crossing Wall Street: The Bond Bull Lives – Several pundits, myself included, have said that the bond market’s 30-year bull run has finally ended. That appeared to happen last September, but it was a head fake. Treasury yields continue to move lower.

Fidelity: Video Opportunities for Bond Buyers – we still see opportunities in the bond market, particularly in the corporate segment where earnings remain positive and balance sheets remain strong, as well as in mortgages. However, we will also continue to position ourselves somewhat cautiously given the extent of the risk rally, the unresolved issues in Europe, and the potential vulnerabilities to the U.S. economy.

Micheal Terry: High Yield: Waiting for the Ax to Fall - Recently, we have started to see a divergence between high yield and equities in what began as equities outpacing high yield and what is currently high yield holding its ground while equities falter. The question this raises is: are equities falling back to meet high yield, or has high yield lagged equities’ downward momentum.

Bloomberg: Hospital Top Returns Await Make or Break Court Rule – Investors betting President Barack Obama’s health-care law will limit hospitals’ unpaid bills have helped fuel the best returns in the municipal market. The U.S. Supreme Court may quash the rally next month…when they vote on Obama’s health care law.

LA Times: Fitch on new California budget problems: Don’t panic (h/t @cate_long) – Fitch Rating’s note suggested little ground for either panic or optimism about the state’s prospects…”We believe that the state of California has the ability to address the expanded budget gap,” the note continues, “although rebalancing the state’s finances and cash flows through fiscal 2013 will not end the state’s fiscal uncertainty.”

Washington Post: Boehner’s debt ceiling crisis would be so much worse than you think – We’re either likely to solve our fiscal problems early in the year in way that defuses Boehner’s debt-ceiling threat or we’re likely to spend 2013 in a state of permanent crisis in which Congress lights the economy on fire by failing on the Bush tax cuts, the automatic spending cuts, the debt ceiling, and the appropriation bills needed to keep the federal government open.

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